II
111th CONGRESS
2d Session
S. 3626
IN THE SENATE OF THE UNITED STATES
July 21, 2010
Mr. Franken (for himself and Mr. Bond) introduced the following bill; which was read twice and referred to the Committee on Finance
A BILL
To encourage the implementation of thermal energy infrastructure, and for other purposes.
Short title; table of contents
Short title
This Act may be cited
as the Thermal Renewable Energy and
Efficiency Act of 2010
.
Table of contents
The table of contents of this Act is as follows:
Sec. 1. Short title; table of contents.
Sec. 2. Findings.
Sec. 3. Purpose.
Sec. 4. Statement of policy.
TITLE I—Modification of credit for electricity produced from certain renewable sources
Sec. 101. Extension of renewable electricity credit to thermal energy.
TITLE II—Exempt facility bonds
Sec. 201. Exempt facility bonds.
TITLE III—Energy sustainability and efficiency grants for institutions
Sec. 301. Definition of institutional entity.
Sec. 302. Availability of grants.
Sec. 303. Authorization of appropriations for grants.
Findings
Congress finds that—
approximately 30 percent of the total quantity of energy consumed in the United States is used to provide thermal energy for heating and cooling building space, domestic hot water, and industrial processes;
thermal energy is an essential, but often overlooked, segment of the national energy mix;
district energy systems use 1 or more central plants to provide thermal energy to multiple buildings that range in size from campus applications to systems heating entire towns or cities;
district energy systems provide sustainable thermal energy infrastructure by producing and distributing thermal energy from combined heat power, sources of industrial or municipal surplus heat, and from renewable sources such as biomass, geothermal, and solar energy;
as of 2009, the United States had approximately 2,500 operating district energy systems;
district energy systems provide advantages that support secure, affordable, renewable, and sustainable energy for the United States, including—
use of local fuels or waste heat sources that keep jobs and energy dollars in local economies;
stable, predictable energy costs for businesses and industry;
reduction in reliance on fossil fuels;
reduction in emissions of greenhouse gases; and
flexibility to modify fuel sources in response to future changes in fuel availability and prices and development of new technologies;
district energy helps cut peak power demand and reduce power transmission and distribution system constraints by—
meeting air conditioning demand through delivery of chilled water produced with heat from combined heat and power or other energy sources; and
shifting power demand through thermal storage and, with combined heat and power, generating power near load centers;
combined heat and power systems increase energy efficiency of power plants by capturing thermal energy and using the thermal energy to provide heating and cooling, more than doubling the efficiency of conventional power plants;
according to the Oak Ridge National Laboratory, if the United States was able to increase combined heat and power from approximately 9 percent of total electric generation capacity to 20 percent by 2030, the increase would—
save as much energy as half of all household energy consumption;
create approximately 1,000,000 new jobs;
avoid more than 800,000,000 metric tons of carbon dioxide emissions annually, which is equivalent to taking half of all United States passenger vehicles off the road; and
save hundreds of millions of barrels of oil equivalent; and
constraints to significant expansion of district energy and combined heat and power include—
the lack of economic value in the energy marketplace for the environmental, grid support, energy security, and local economic development benefits of district energy systems;
relatively high project development costs due to the variety of institutional, legal, and technical issues that must be addressed; and
the high costs of debt service, particularly in the early years of systems development before a broad base of customers has connected.
Purpose
The purpose of this Act is to encourage the implementation of thermal energy infrastructure order to—
increase energy efficiency;
increase use of renewable energy resources;
revitalize the infrastructure of the cities and institutions of the United States;
reduce local and regional air pollution;
reduce emissions of greenhouse gases;
reduce emissions of ozone-depleting refrigerants; and
enhance power grid reliability and overall energy supply reliability and energy security.
Statement of policy
It is the policy of the United States that, in energy policy development and program implementation, the following factors should be considered:
Thermal energy represents a significant part of the energy requirements of the United States, providing building heating and cooling, domestic hot water, and industrial process energy.
There are many opportunities for meeting thermal energy requirements directly through renewable energy sources or recycled energy (such as recovered waste heat), without generation of electricity.
Policies and incentives for encouraging renewable energy and energy efficiency should address thermal energy as well as electricity.
District energy systems provide an important means of delivering sustainable thermal energy to consumers, and provide energy security benefits, by—
cutting peak power demand;
reducing power transmission and distribution system constraints; and
providing flexibility to modify fuel sources in response to future changes in fuel availabilities and prices and development of new technologies.
Modification of credit for electricity produced from certain renewable sources
Extension of renewable electricity credit to thermal energy
Credit To include production of thermal energy
Section 45 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection:
Credit for production of thermal energy
In general
In the case of a taxpayer who—
produces thermal energy from a qualified energy resource described in subparagraph (B), (C), (D), (G), (I), or (J) of subsection (c)(1) at a qualified facility described in paragraph (2), (3), (4), (6), (7), (11), or (12) of subsection (d), and
makes an election under this subsection with respect to such facility,
each 3,412 Btus of thermal energy (or fraction thereof)for
the kilowatt hours of electricityin paragraph (2) thereof.
Thermal energy
For purposes of this section, the term thermal energy means heat (in the form of hot water or steam) or cooling (in the form of chilled water or ice).
Additional qualifications
Combined heat and power facility
In the case of a facility producing both electricity and thermal energy, such facility shall not be treated as a qualified facility unless such facility—
meets the requirements of section 48(c)(3)(A) (without regard to clause (iv) thereof), and
was originally placed in service after the date of the enactment of the Thermal Renewable Energy and Efficiency Act of 2010, and before the date which is 5 years after such date.
Thermal facility
In the case of a facility producing only thermal energy, such facility shall not be treated as a qualified facility unless such facility—
has an energy efficiency percentage (as determined under section 48(c)(3)(C)) in excess of 60 percent, and
was originally placed in service after the date of the enactment of the Thermal Renewable Energy and Efficiency Act of 2010, and before the date which is 5 years after such date.
Denial of double benefit
If an election under this subsection is in effect with respect to any facility, no credit shall be allowed under subsection (a) with respect to the production of electricity at such facility.
Election
In general
An election under this subsection shall specify the facility to which the election applies and shall be in such manner as the Secretary may by regulations prescribe.
Election irrevocable
Any election made under this subsection may not be revoked except with the consent of the Secretary.
.
Naturally occurring cold water sources treated as qualified energy resource
Paragraph (1) of section 45(c) of the Internal Revenue Code of 1986 is amended—
by striking
and
at the end of subparagraph (H),
by striking the
period at the end of subparagraph (I) and inserting , and
,
and
by adding at the end the following new subparagraph:
naturally occurring cold water sources which are used to provide thermal energy for air conditioning.
.
Qualified facilities
Section 45(d) of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph:
Natural air conditioning system facility
In the case of a facility providing thermal energy for air conditioning from naturally occurring cold water sources, the term qualified facility means any facility owned by the taxpayer which is originally placed in service after the date of the enactment of the Thermal Renewable Energy and Efficiency Act of 2010, and before the date which is 5 years after such date.
.
Conforming amendments
Section
45(b)(4)(A) of the Internal Revenue Code of 1986 is amended by inserting
or thermal energy
after electricity
.
Section 45(c)(2)
of such Code is amended by inserting or thermal energy
after
electricity
.
Section 45(d) of
such Code is amended by inserting or thermal energy
after
electricity
each place it appears in paragraphs (2), (3), (4),
(6), (7), and (11).
Section 45(e) of
such Code is amended by inserting or thermal energy
after
electricity
each place it appears in paragraphs (1), (4), and
(9).
The heading of
section 45 of such Code is amended by inserting and thermal energy
after
Electricity
.
The item relating
to section 45 in the table of sections for subpart D of part IV of subchapter A
of chapter 1 of such Code is amended by inserting and thermal
energy
after Electricity
.
Effective date
The amendments made by this section shall apply to energy produced and sold after the date of the enactment of this Act.
Exempt facility bonds
Exempt facility bonds
Definition of local district heating and cooling facilities
Subparagraph (A) of
section 142(g)(2) of the Internal Revenue Code of 1986 is amended by striking
a pipeline or network (which may be connected to a heating or cooling
source) providing hot water, chilled water, or steam
and inserting
equipment for producing thermal energy in the form of hot water, chilled
water or steam, distributing that thermal energy in pipelines and transferring
the thermal energy
.
Public use requirement
The Secretary shall promulgate regulations establishing that a local district heating or cooling facility will be treated in all events as serving a general public use for purposes of the Internal Revenue Code of 1986.
Energy sustainability and efficiency grants for institutions
Definition of institutional entity
Section
399A(a)(5) of the Energy Policy and Conservation Act (42 U.S.C. 6371h–1(a)(5))
is amended by inserting a not-for-profit district energy system,
after utility,
.
Availability of grants
Section 399A(f) of the Energy Policy and Conservation Act (42 U.S.C. 6371h–1(f)) is amended—
in paragraph (2)—
in subparagraph
(A)(i), by striking $50,000
and inserting
$90,000
;
in subparagraph
(B)(i), by striking $90,000
and inserting
$150,000
; and
in subparagraph
(C)(i), by striking $250,000
and inserting
$600,000
; and
in paragraph (3)—
in subparagraph
(A), by striking $1,000,000
and inserting
$20,000,000
; and
in subparagraph
(B), by striking 60 percent
and inserting 30
percent
.
Authorization of appropriations for grants
Section 399A(i)(1) of the Energy Policy and
Conservation Act (42 U.S.C. 6371h–1(i)(1)) is amended by striking
$250,000,000 for each of fiscal years 2009 through 2013
and
inserting $500,000,000 for each of fiscal years 2011 through
2015
.